FI 201

Assignment for Chapters 23 and 24

1. The chief financial officer of AJAX Industries expects sales to increase from $8,000,000 in 2010 to $12,000,000 in 2011. Current assets in 2010 are equal to $5,000,000. Using the percent of sales method, projected current assets for 2011 are equal to: (Please Show your work)

A) $5,500,000

B) $7,083,333

C) $9,000,000

D) $7,500,000

2. Mercer, Inc. had the following sales for the past six months. Mercer collects its credit sales 30% in the month of sale, 60% one month after the sale, and 10% two months after the sale.

Cash Sales Credit Sales

January $50,000 $50,000

February $70,000 $110,000

March $55,000 $95,000

April $78,000 $130,000

May $80,000 $105,000

June $75,000 $148,000

What are Mercer's total cash receipts for the month of March? (Please Show your work)

A) $99,500

B) $119,000

C) $150,000

D) $154,500